US Dollar Index flirting with 3-week highs near 97.40

The index moved higher and tested 97.40, new 3-week highs.
US 10-year yields regained 2.50%, although deflated somewhat later.
Durable Goods Orders next of relevance in the calendar.

Pablo Piovano FXStreet

The greenback is prolonging the rally on Tuesday, advancing to fresh 3-week highs in the 97.40 region when tracked by the US Dollar Index (DXY).

US Dollar Index looks to data, risk trend

The index is advancing for the sixth session in a row so far on Tuesday, as the optimism around the risk-associated complex seen at the beginning of the week faded somehow late on Monday.

In addition, auspicious results from the ISM Manufacturing during March lent extra wings to the buck yesterday, collaborating with the up move to fresh multi-week tops in the 97.40 region.

Looking ahead, Durable Goods Orders for the month of February will be the sole release in the NA session later today.

What to look for around USD

The greenback remains bid against the backdrop of uncertainty around Brexit, lack of significant progress in the US-China trade talks and a generalized deteriorating mood surrounding the riskier assets. In addition, positive results in the US calendar have been also fuelling the upside in DXY to 97.00 and beyond, while market participants continue to adjust to the prospects of no hikes from the Fed this year and just one probable rate raise in 2020. Additionally, the buck’s safe haven appeal and widening rate differentials vs. its peers are also are also lending support to the move. From the political view, the debt ceiling, the border-wall funding and upcoming elections next year carry the potential to spark bouts of extra volatility around USD.

US Dollar Index relevant levels

At the moment, the pair is up 0.01% at 97.35 and a breakout of 97.39 (high Apr.1) would expose 97.71 (2019 high Mar.7) and finally 97.87 (monthly high Jun.20 2017). On the flip side, the initial support emerges at 96.83 (21-day SMA) seconded by 96.52 (55-day SMA) and finally 95.74 (low Mar.20).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

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